David Cameron has confirmed that the Big Society Bank will receive an additional £200m from national banks, ahead of the Project Merlin announcement later today.
Speaking at Prime Minister's questions this afternoon Cameron advised that a settlement between the government and the UK’s largest banks will inject £200m into the newly formed Big Society Bank, which is to be set up to provide capital for voluntary sector groups.
But the figure is significantly lower than the anticipated £1.5bn earlier rumoured to have been provided by the banks. Project Merlin, as the talks between government and the banks have been dubbed, is aimed at improving public opinion of the banks following the financial crisis but due to the secretive nature of the discussions, speculation has been rife.
In mid-December it was reported that the talks had broken down, threatening any funding to the sector. However today’s announcement has been welcomed by NCVO chief executive Sir Stuart Etherington:
"This is a good start which demonstrates that the government is listening to the sector’s concerns about the challenges ahead,” he said.
But he advised that these funds alone would not be enough to ensure the Big Society Bank's prosperity: "The success of the Bank will also rely on securing sufficient additional private capital, above the amounts available from unclaimed assets, and on the levels of financial capability and investment readiness in the voluntary and community sector," he asserted.
The £200m fund is in addition to between £300m and £400m of funding expected to be received from dormant accounts.
Charity Finance Directors' Group chief executive Caron Bradshaw noted that she was "pleased to see" the additional funds, but added:
"Without wishing to quash Government’s positive step in the right direction the amount is a drop in the ocean when considered again a backdrop of the financial squeeze being experienced by the sector. There will need to be significant other sums available to the sector to fill the funding gap and Government must play its part in pressing for more investment in to the sector."
The Bank aims to issue its first funds in the autumn of this year.
The Prime Minister made today’s revelation in answer to Opposition leader Ed Miliband’s accusations that spending cuts are “destroying” voluntary efforts.
